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The government shutdown's forgotten victims

Tens of thousands of employees are feeling the pain — they work for private contractors that haven't received over $5 billion in federal payments.
Image: Union Organizers In Washington, D.C. Hold Rallies Calling For End To Government Shutdown
Hundreds of federal workers and contractors rally against the partial federal government shutdown outside the headquarters of the AFL-CIO in Washington on January 10, 2019.Chip Somodevilla / Getty Images

The government shutdown has already cost federal contractors — and their employees — between $5 and $6 billion, experts say.

And unlike the 800,000 furloughed federal employees who haven't been paid since the longest shutdown in U.S. history began on Dec. 22, the contractors aren't likely to get back pay when the impasse eventually ends.

An analysis by Bloomberg News found the shutdown is costing contractors to lose a total of over $200 million a day — a hardship for mid-size companies and devastating for smaller outfits.

That puts the direct loss to the economy at roughly $5.6 billion as of Friday — about the same amount President Donald Trump is demanding from Congress to build his border wall and reopen the government.

The money crunch has already caused affected companies to have to furlough "tens of thousands of government contracted employees," said David Berteau, president of the Professional Services Council, which represents 400 companies with government contracts.

"We economists are likely severely underestimating the economic impact due to the loss of work from government contractors," said Joseph Brusuelas, chief economist for international consulting RSM US. "We are in uncharted terrain with a shutdown of this breadth and depth."

There are over 5 million contract employees working across the federal government, ranging from highly paid consulting and technical jobs to lower paid janitorial and cafeteria jobs. It's unclear how many are affected by the partial shutdown, but Paul Light, a professor of public policy at New York University, estimated it to be 1.2 million workers and grant recipients.

"If you're a contractor or a non-profit or a university and you have the money in hand, you're okay. But if you're waiting to execute work orders — you ain't going to get paid," Light told NBC News, and that's taking a toll on the greater economy.

"They've underestimated an integral part of the federal workforce. They spend money, just like federal employees. They know they better not buy that new car now, or schedule a vacation," Light said. "There's too much uncertainty."

The contract employees are facing additional issues as well. While federal workers are still getting their health care, some contractors who aren't getting work are worried they won't be able to pay their insurance premiums, the experts say.

“They're right to be concerned. It's one of those ancillary issues for government contractors that has a real impact," Alan Chvotkin, executive vice-president of the Professional Services Council.

He said the larger companies with government contracts have been able to stanch the bleeding by "putting their employees on other work or putting them on training vacation or status," but that may not be an option for smaller companies.

"Companies have contingency plans, but not for a shutdown this long," Chvotkin said.

He said his organization has been talking to members of Congress to get them to consider back payments for contract workers after the shutdown ends, but acknowledged it's a tough task that's never been done before.

"It's more complicated because it involved thousands of employers" and "different employment statuses. The mechanics are different," Chvotkin said, adding some lawmakers have shown "a willingness" to tackle the issue.

"We're hopeful members of Congress will come to a solution and that the president will agree," he said.

Brusuelas said the worst is yet to come.

"It's doesn't look like there's an end in sight," he said.

CORRECTION: (Jan. 22, 2019, 11:31 a.m. ET): A previous version of this article misspelled the name of the executive vice president of the Professional Services Council. He is Alan Chvotkin, not Shvotkin.